AP Eagers sells Brisbane property for $61m
27 June 2019, Written by David Simmons
AP Eagers (ASX: APE) is busily gearing up for its proposed merger with Automotive Holdings Group (ASX: AHG) with the sale of one of its properties near the Brisbane River.
The car dealer sold its property at 99 Breakfast Creek Road, Newstead to the Seymour Group for $61 million.
AP Eagers will continue to operate its business from the property following settlement, having entered into a seven-year lease-back.
The sale will generate a profit before tax of $26.1 million for AP Eagers, which will result in an annual profit contribution of $3.7 million.
CEO Martin Ward (pictured) says the sale aligns with the group's changing priorities in Brisbane.
"The sale and leaseback of this property, on attractive terms, is consistent with our active approach to managing our property portfolio and underpins our strategic move to the world class Auto Mall planned for Brisbane Airport," says Ward.
AP Eagers still expects to hold a substantial portfolio of owned property post-sale with a value of around $280 million.
The news comes as AP Eagers is involved in the final stages of a proposed merger with fellow car dealers AHG.
On Monday the Australian Competition and Consumer Commission raised a red flag, saying that the merger might have anti-competitive consequences in the Newcastle and Hunter Valley regions of New South Wales.
"A combined AP Eagers and AHG would operate 46 per cent of new car dealership sites in the Newcastle/Hunter Valley region, including those for the ten most popular brands, and runs 54 per cent of the dealership sites selling those brands," said ACCC acting chair Delia Rickard on Monday.
"In metropolitan Newcastle alone, the combined company would operate 77 per cent of dealership sites selling the ten most popular brands."
"We believe that local consumers generally don't travel beyond the Newcastle/Hunter Valley region to buy new cars, and it is difficult to find out the final price for a car without visiting a dealership."
If the deal goes through the merged group of two of Australia's largest automotive dealers will have a market capitalisation of $2.3 billion, and existing AHG shareholders would own 25.5 per cent of the new entity.
Business News Australia
Author: David Simmons